Dividing IRA’s Upon Divorce

ERISA retirement plans can only be divided in a divorce by way of a Qualified Domestic Relations Order, or QDRO.

An Individual Retirement Account, on the other hand, is not an ERISA plan and, therefore, does not require a QDRO in order to be divided. IRAs are split according to the divorce agreement, not a QDRO. A copy of the divorce decree or separation agreement is given to the IRA custodian. When an IRA is split in a divorce, transferring the portion of the IRA that goes to the former spouse via a direct trustee-to-trustee transfer to an IRA in the name of the former spouse is the best way to move the funds.

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